Mingo Logan Coal Co. v. Environmental Protection Agency

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 11, 2016 Decided July 19, 2016

No. 14-5305

MINGO LOGAN COAL COMPANY,

APPELLANT

v.

ENVIRONMENTAL PROTECTION AGENCY,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:10-cv-00541)

Paul D. Clement argued the cause for the appellant.

Jeffrey M. Harris, Nathan A. Sales, Robert M. Rolfe, George P.

Sibley III, Virginia S. Albrecht and Deidre G. Duncan were

with him on brief.

Matthew Littleton, Attorney, United States Department of

Justice, argued the cause for the appellee. John C. Cruden,

Assistant Attorney General, Aaron P. Avila, Mark R. Haag,

Cynthia J. Morris, Kenneth C. Amaditz, Attorneys, Stefania D.

Shamet, Counsel, United States Environmental Protection

Agency, and Ann D. Navaro, Assistant Chief Counsel for

Litigation, were with him on brief.

2

Emma C. Cheuse, Jennifer C. Chavez, and Benjamin A.

Luckett were on brief for the amici curiae West Virginia

Highlands Conservancy, et al. in support of the appellee.

Before: HENDERSON, KAVANAUGH and SRINIVASAN,

Circuit Judges.

Opinion for the Court filed by Circuit Judge HENDERSON.

Dissenting opinion filed by Circuit Judge KAVANAUGH.

KAREN LECRAFT HENDERSON, Circuit Judge: In 2007,

the United States Army Corps of Engineers (Corps) issued

Mingo Logan Coal Co. (Mingo Logan) a permit to excavate the

tops of several West Virginia mountains, extract exposed coal

and dispose of the excess soil and rock in three surrounding

valleys containing streams. Four years later, after additional

study, the United States Environmental Protection Agency

(EPA) decided that the project would result in “unacceptable

adverse effect[s]” to the environment. See 33 U.S.C.

§ 1344(c). The EPA therefore withdrew approval from two of

the disposal sites, which together “make up roughly eighty

eight percent of the total discharge area authorized by the

permit.” Mingo Logan Coal Co. v. EPA (Mingo Logan I), 850

F. Supp. 2d 133, 137 (D.D.C. 2012). In 2013, Mingo Logan

challenged the EPA’s statutory authority to withdraw the two

sites from the Corps permit after it had been issued but we

determined that the Clean Water Act (CWA) authorized the

EPA to do so. See Mingo Logan Coal Co. v. EPA (Mingo

Logan II), 714 F.3d 608, 616 (D.C. Cir. 2013). We then

remanded the case to the district court to consider Mingo

Logan’s remaining Administrative Procedure Act (APA)

challenges. See id. The district court thereafter rejected

them. See Mingo Logan Coal Co. v. EPA (Mingo Logan III),

70 F. Supp. 3d 151, 183 (D.D.C. 2014).

3

Mingo Logan now appeals the district court’s resolution of

its APA claims. Specifically, the company argues that the

EPA failed to engage in reasoned decisionmaking by ignoring

Mingo Logan’s reliance on the initial permit, impermissibly

considering the effects of downstream water quality and failing

to explain adequately why the project’s environmental effects

were so unacceptable as to justify withdrawal. We conclude

that the EPA did not violate the APA in withdrawing

specification of certain disposal areas from the permit; rather, it

considered the relevant factors and adequately explained its

decision. The EPA’s ex post withdrawal is a product of its

broad veto authority under the CWA, not a procedural defect.

Accordingly, we affirm.

I.

A. Statutory and Regulatory Background

Under the CWA, 33 U.S.C. §§ 1251 et seq., a party must

generally obtain a permit from the relevant state and/or federal

authority before discharging “any pollutant” into “navigable

waters.” 1 See id. §§ 1311(a), 1341–45. Two categories of

permits are involved in this case: a permit for the discharge of

“dredged or fill material” under section 404 of the Act, see id.

§ 1344, and a permit for the discharge of all other pollutants

under section 402, see id. § 1342.

1. Section 404

Under section 404, the Corps and qualified states are

authorized to issue permits allowing “the discharge of dredged

or fill material” into bodies of water “at specified disposal

1

The CWA defines “navigable waters” as “the waters of the

United States, including the territorial seas.” 33 U.S.C. § 1362(7).

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sites.” Id. § 1344(a), (g). The permit is required if, as here, a

permit applicant plans to remove soil or rock from one location

(i.e., “fill material” 2) and dispose of it into “navigable waters.”

See id. § 1344(a). The Corps specifies sites for disposal of

dredge-and-fill material in accordance with so-called 404(b)

Guidelines it has developed jointly with the EPA. See id.

§ 1344(b). Once the Corps has issued a 404 permit, it retains

discretion to “modify, suspend, or revoke” it. 33 C.F.R.

§ 325.7(a). “Among the factors to be considered” by the

Corps in making a revocation decision are:

the extent of the permittee’s compliance with the

terms and conditions of the permit; whether or not

circumstances relating to the authorized activity have

changed since the permit was issued or extended, and

the continuing adequacy of or need for the permit

conditions; any significant objections to the

authorized activity which were not earlier considered;

revisions to applicable statutory and/or regulatory

authorities; and the extent to which modification,

suspension, or other action would adversely affect

plans, investments and actions the permittee has

reasonably made or taken in reliance on the permit.

Id.

2

Corps regulations define “fill material” as “material placed

in waters of the United States where the material has the effect of (i)

[r]eplacing any portion of a water of the United States with dry

land[] or (ii) [c]hanging the bottom elevation of any portion of a

water of the United States.” 33 C.F.R. § 323.2(e)(1). Examples

include “rock, sand, soil, clay, plastics, construction debris, wood

chips, [and] overburden from mining or other excavation activities.”

Id. § 323.2(e)(2).

5

Although the EPA does not issue the 404 permit directly, it

has “a broad environmental ‘backstop’ authority over the

[Corps’s] discharge site selection.” Mingo Logan II, 714 F.3d

at 612. Specifically, under section 404(c), the EPA may

“deny,” “restrict” or “withdraw[]” specification of a site for

disposal of dredge-and-fill material. 33 U.S.C. § 1344(c).

The EPA is authorized to exercise this authority “whenever

[the EPA Administrator] determines, after notice and

opportunity for public hearings, that the discharge of such

materials into such area [specified for disposal] will have an

unacceptable adverse effect on municipal water supplies,

shellfish beds and fishery areas (including spawning and

breeding areas), wildlife, or recreational areas.” Id. (emphasis

added). In Mingo Logan II, we held that the EPA could

exercise this “backstop” authority both pre-permit and

post-permit; that is, the EPA may prevent the Corps from

issuing a 404 permit specifying a disposal site or it may

withdraw specification of a disposal site after the Corps has

issued a permit. Mingo Logan II, 714 F.3d at 612–14, 616.

EPA regulations further define the adverse environmental

effects the Administrator must identify before stepping in to

deny, restrict or withdraw a 404 permit. Specifically, the EPA

has interpreted “unacceptable adverse effect” to mean an

“impact on an aquatic or wetland ecosystem which is likely to

result in significant degradation of municipal water supplies

(including surface or ground water) or significant loss of or

damage to fisheries, shellfishing, or wildlife habitat or

recreation areas.” 40 C.F.R. § 231.2(e) (emphases added).

When the EPA restricts or withdraws areas specified for

disposal in a validly issued permit, the entire permit is not

necessarily invalidated; rather, the permit is “in effect amended

so that discharges at the previously specified disposal sites are

no longer in ‘[c]ompliance with’ the permit.” Mingo Logan

II, 714 F.3d at 615 (alteration in original) (quoting 33 U.S.C.

6

§ 1344(p)). Thus, to the extent a site passes EPA muster, the

permittee may continue to dispose of dredge-and-fill material

thereat. See id. at 615 & n.5.

2. Section 402

Section 402 of the CWA establishes a separate permitting

scheme, called the National Pollutant Discharge Elimination

System (NPDES), under which the EPA is authorized to issue a

permit for the discharge of all pollutants other than

dredge-and-fill material. See 33 U.S.C. § 1342(a); see also

Coeur Alaska, Inc. v. Se. Alaska Conservation Council, 557

U.S. 261, 273 (2009). Alternatively, a state may assume

authority for issuing a NPDES permit “for discharges into

navigable waters within its jurisdiction.” 33 U.S.C.

§ 1342(b). If a state submits a description of its planned

permitting program to the EPA and its plan meets the relevant

CWA criteria, the EPA “shall approve” the program. Id.

The state then becomes responsible for issuing a NPDES

permit for pollutant discharge, see id., and the federal NPDES

permitting program is suspended for qualified waters within

that state’s jurisdiction, see id. § 1342(c)(1).

The EPA, however, maintains an oversight role. It may

“withdraw approval of [the state] program” if it determines that

the program is not being administered in accordance with the

CWA and the state takes no corrective action. See id.

§ 1342(c)(3). Further, a state must submit to the EPA a copy

of each permit application it receives and must keep the EPA

informed of the state’s consideration of the application. Id.

§ 1342(d)(1). The EPA, acting through its Administrator,

may object to the issuance of a state NPDES permit within

ninety days of receipt thereof and, if it does so, the state may

not issue the permit. See id. § 1342(d)(2). If the state fails to

revise the permit to comply with CWA guidelines and

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requirements, the EPA may issue a revised permit that

complies with the CWA. See id. § 1342(d)(4). Importantly,

“[o]nce a section 402 permit has been issued, it may only be

modified by the entity that issued the permit.” Mingo Logan

III, 70 F. Supp. 3d at 155 (citing 40 C.F.R. §§ 122.2, 122.62,

124.5(c)).

B. Factual Background

In 1997, Hobet Mining, Inc., Mingo Logan’s predecessor,

began the process of securing the various permits required for

operation of the Spruce No. 1 Mine, a proposed large-scale

surface mining operation in West Virginia. Mingo Logan

planned to use a surface-mining technique known as

mountaintop mining at Spruce No. 1, whereby large swathes of

land are removed from the surface, exposing coal deposits

underneath. See generally Ohio Valley Envtl. Coal. v.

Aracoma Coal Co., 556 F.3d 177, 186 (4th Cir. 2009). The

excess soil and rock (“spoil” or “overburden”) is then relocated

to adjacent valleys, “creating a ‘valley fill’ that buries

intermittent and perennial streams in the process.” Id.

Runoff water from the valley fill is collected in sediment

ponds, where sediment suspended in the runoff water is

allowed to settle. Id. The water collected in the ponds is then

treated and discharged back into natural streams. Id.

Mingo Logan’s final proposal for the mine designated

three sites for disposal of spoil, resulting in the burial of

approximately 7.48 miles of three streams: (1) Seng Camp

Creek; (2) Pigeonroost Branch; and (3) Oldhouse Branch.

Because the streams were also going to be affected by the

discharge of treated water, the project required both a 404

permit from the Corps for disposal of the spoil and an NPDES

permit from West Virginia, which had secured an

EPA-approved permitting plan under section 402.

8

Hobet Mining initiated the application process for a

NPDES permit from West Virginia’s Department of

Environmental Protection (WVDEP) in late 1997. Consistent

with its CWA obligations, WVDEP notified the EPA of the

application and forwarded it a proposed permit. The EPA

initially objected but, after WVDEP placed additional

conditions on the NPDES permit, the EPA withdrew its

objections in December 1998 and approved the modified

permit in January 1999. West Virginia thus issued a valid

NPDES permit to Hobet Mining on January 11, 1999. The

permit was modified in 2003 and 2005, which modifications

were eventually approved by the EPA. The NPDES permit

has since been renewed and remains in effect.

The 404 permitting process was much more extensive.

Hobet Mining first applied to the Corps for an individual 404

permit in 1999, triggering a lengthy review process. After a

seven-year consultation with Mingo Logan, the EPA and West

Virginia, the Corps produced a 1600-page draft Environmental

Impact Statement (EIS) on March 31, 2006. Although the

EPA “expressed its concern that ‘even with the best practices,

mountaintop mining yields significant and unavoidable

environmental impacts that had not been adequately described

in the document,’ ” Mingo Logan II, 714 F.3d at 610 (quoting

Letter from EPA, Region III to Corps, Huntington Dist., at 1

(June 16, 2006)), it ultimately “declined to pursue a[n] . . .

objection” to the issuance of a 404 permit, id. Specifically, in

an email, William Hoffman, Director of the EPA Office of

Environmental Programs, told the Corps that it “ha[d] no

intention of taking [its] Spruce Mine concerns any further from

a Section 404 standpoint.” E-mail from EPA to Corps (Nov.

2, 2006), Joint App’x (J.A.) 292. On January 22, 2007, the

Corps issued the 404 permit allowing the disposal of spoil into

the three specified stream areas.

9

Mingo Logan’s 404 permit was almost immediately

challenged in court by environmental groups, which added the

permit to ongoing litigation challenging other coal-mining

permits. See Ohio Valley Envtl. Coal. v. U.S. Army Corps of

Eng’rs (OVEC), 243 F.R.D. 253, 255, 257 (S.D.W. Va. 2007). 3

Pursuant to an agreement it reached with the environmental

plaintiffs, Mingo Logan began operations at the Spruce Mine

in 2007 but limited its disposal of spoil to a single valley

fill—the Seng Camp Creek disposal site. The other two

disposal sites—Pigeonroost Branch and Oldhouse

Branch—remained unused.

On September 3, 2009, the EPA stepped in. It requested

that the Corps use its discretionary authority to suspend, revoke

or modify the permit based on “new information and

circumstances” that “justif[ied] reconsideration of the permit.”

Letter from EPA, Region III to Corps, Huntington Dist., at 1

(Sept. 3, 2009), J.A. 309. The Corps sought comment from

Mingo Logan and West Virginia; both opposed revoking,

suspending or modifying the permit and asserted that the

EPA’s concerns were not based on new information. The

Corps rejected the EPA request on September 30, 2009. After

addressing each of the EPA’s concerns, the Corps “determined

that no additional evaluation of the project’s effects on the

environment are warranted, the permit will not be suspended,

3

The environmental litigation was stayed once the EPA

requested that the Corps revoke Mingo Logan’s 404 permit, see

OVEC, 2009 WL 3014943, at *1–2 (S.D.W. Va. Sept. 15, 2009), and

the stay was extended once the EPA initiated its review of the permit

under section 404(c), see OVEC, 2009 WL 3424175, at *1–4

(S.D.W. Va. Oct. 21, 2009). It remains stayed as it relates to

Mingo’s use of the Pigeonroost Branch and Oldhouse Branch

disposal sites. See OVEC, Civil Action No. 3:05-0784 (Aug. 9,

2012), ECF No. 525.

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modified or revoked, and a supplemental EIS will not be

prepared.” Letter from Corps, Huntington Dist. to EPA,

Region III, at 4 (Sept. 30, 2009), J.A. 331.

In response, on April 2, 2010, the EPA intervened directly.

Invoking its veto authority under section 404(c), the EPA

published a Proposed Determination withdrawing the 404

permit specification of the (as yet unused) Pigeonroost and

Oldhouse Branch disposal sites. These disposal sites together

amounted to approximately eighty-eight per cent of the area

the original permit allowed for valley fills. 4 See Mingo Logan

I, 850 F. Supp. 2d at 137. After holding a public hearing and

receiving comments, the EPA ultimately issued a Final

Determination on January 13, 2011, withdrawing specification

of the two disposal sites.

The EPA gave two primary reasons for its withdrawal:

(1) the “unacceptable adverse impacts” resulting from “direct

impacts to wildlife and wildlife habitat” in each area where the

fill was in fact to occur (the fill “footprint”), see Final

Determination of the U.S. Environmental Protection Agency

Pursuant to § 404(c) of the Clean Water Act Concerning the

Spruce No. 1 Mine, Logan County, West Virginia (Final

Determination), at 47, 50 (Jan. 13, 2011); and (2) the

“[u]nacceptable adverse impacts” on wildlife occurring

“downstream of the footprint of the fills and sediment ponds,”

id. at 50. As to the first basis, the EPA determined that “[t]he

destruction of 6.6 miles of high quality stream habitat . . . , and

the subsequent loss of many populations of

4

Due to the amount of area withdrawn, Mingo Logan refers to

the challenged EPA decision as the “revocation” or “withdrawal” of

its permit and we follow suit. See, e.g., Appellant’s Br. 11, 18. We

note, however, that Mingo Logan’s 404 permit remains in effect at

the Seng Camp Creek site.

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macroinvertebrates, salamanders, fish and other wildlife

dependent upon that aquatic habitat area for survival, . . . will

result in a loss of regional biodiversity and the broader

ecosystem functions these populations provide.” Id. at 47. It

cited specific concerns for each population described and, in

view of its conclusion that the affected streams “are some of

the last, rare and important high quality streams in the

watershed,” it decided that the adverse effect on the local

wildlife “is one that the aquatic ecosystem cannot afford.” Id.

at 50. As for the adverse environmental impact downstream,

the EPA concluded that removing the Pigeonroost and

Oldhouse Branches “as sources of freshwater dilution and

converting them to sources of pollution” would increase water

contamination and salinity, both producing a negative effect on

various wildlife, including macroinvertebrates, salamanders,

fish and water-dependent birds. Id. at 50, 60–73.

C. Procedural Background

Once the EPA issued its Final Determination, Mingo

Logan filed suit in district court, alleging that the EPA lacked

statutory authority under the CWA to revoke a valid 404 permit

after the Corps had issued it and that the EPA’s Final

Determination was, for numerous reasons, arbitrary,

capricious, or otherwise contrary to law in violation of the

Administrative Procedure Act (APA), 5 U.S.C. § 706. See

Mingo Logan III, 70 F. Supp. 3d at 160. We resolved the first

claim in Mingo Logan II, upholding the EPA’s authority under

section 404(c) of the CWA to withdraw specification of

spoil-disposal sites after the Corps had issued a 404 permit.

See 714 F.3d at 616. We remanded the APA claim to the

district court. Id.

On remand, the district court concluded that the EPA’s

Final Determination complied with the APA. See Mingo

12

Logan III, 70 F. Supp. 3d at 154–55. It noted that both bases

the EPA asserted for withdrawing the permit—the direct

effects to wildlife within the valley fills’ footprint and the

effects of the valley fills on downstream

wildlife—independently supported its revocation decision,

concluding that the EPA had not acted arbitrarily or

capriciously in identifying “unacceptable adverse effect[s]”

under both rationales. Id. at 175–76 (effects within the

footprint); id. at 181–83 (downstream effects). Accordingly,

it granted summary judgment to the EPA. Id. at 183. Mingo

Logan now appeals. Our review is de novo. Murphy v. Exec.

Office for U.S. Attorneys, 789 F.3d 204, 208 (D.C. Cir. 2015);

see also Holland v. Nat’l Mining Ass’n, 309 F.3d 808, 814

(D.C. Cir. 2002) (“[W]e review the administrative action

directly, according no particular deference to the judgment of

the District Court.”).

II.

The general legal principles attending our review are

well-settled. The APA directs us to “set aside agency action”

that is “arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).

Agency action is “arbitrary and capricious if the agency has

relied on factors which Congress has not intended it to

consider, entirely failed to consider an important aspect of the

problem, [or] offered an explanation for its decision that runs

counter to the evidence before the agency.” Motor Vehicle

Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 43 (1983). Although we must ensure that “an

agency’s decreed result [is] within the scope of its lawful

authority” and that “the process by which it reaches that result

[is] logical and rational,” Michigan v. EPA, 135 S. Ct. 2699,

2706 (2015) (quoting Allentown Mack Sales & Serv., Inc. v.

NLRB, 522 U.S. 359, 374 (1998)), we are “not to substitute

13

[our] judgment for that of the agency,” State Farm, 463 U.S. at

43. Whether we would have done what the agency did is

immaterial; so long as the agency “examine[d] the relevant

data and articulate[d] a satisfactory explanation for its action[,]

including a ‘rational connection between the facts found and

the choice made,’ ” we will ordinarily uphold it. Id. (quoting

Burlington Truck Lines v. United States, 371 U.S. 156, 168

(1962)).

When an agency changes policy, however, it must in some

cases “provide a more detailed justification than what would

suffice for a new policy created on a blank slate.” FCC v. Fox

Television Stations, Inc., 556 U.S. 502, 515 (2009). Changing

policy does not, on its own, trigger an especially “demanding

burden of justification,” Ark Initiative v. Tidwell, 816 F.3d 119,

127 (D.C. Cir. 2016); indeed, the agency “need not

demonstrate to a court’s satisfaction that the reasons for the

new policy are better than the reasons for the old one,” Fox,

556 U.S. at 515 (emphasis in original). That said, if a “new

policy rests upon factual findings that contradict those which

underlay [an agency’s] prior policy,” the agency “must”

provide “a more detailed justification” for its action. Id. The

same is true if the agency’s “prior policy has engendered

serious reliance interests that must be taken into account.” Id.

In such cases, in order to offer “a satisfactory explanation” for

its action, “including a rational connection between the facts

found and the choice made,” State Farm, 463 U.S. at 43

(internal quotation marks omitted), the agency must give “a

reasoned explanation . . . for disregarding facts and

circumstances that underlay or were engendered by the prior

policy,” Fox, 556 U.S. at 516.

In this case, Mingo Logan claims that the EPA’s

post-permit revocation is the epitome of arbitrary-and-

capricious agency action. Not only did the EPA “entirely

14

fail[] to consider an important aspect of the problem,” Mingo

Logan claims, it also “relied on factors which Congress has not

intended it to consider” and “offered an explanation for its

decision that runs counter to the evidence.” See State Farm,

463 U.S. at 43. This “rare and impressive trifecta,”

Appellant’s Br. 4, is particularly egregious, Mingo Logan

avers, given that the EPA was subject to Fox’s more detailed

justification standard, see 556 U.S. at 515–16. As Mingo

Logan sees it, because the EPA did not veto the Spruce No. 1

permit the first time around, it must provide a weighty basis for

withdrawing specification of two disposal sites four years later.

We disagree with Mingo Logan’s assessment and address each

prong of the alleged “trifecta” in turn.

A. EPA’s Consideration of Relevant Factors

Mingo Logan first argues that the EPA “entirely failed to

consider an important aspect of the problem”—the costs

Mingo Logan incurred in reliance on the permit and its history

of compliance with the permit’s conditions. Appellant’s Br.

18–19 (quoting State Farm, 463 U.S. at 43). As Mingo Logan

sees it, the EPA may revoke a permit only if it balances

resulting adverse environmental effects against the permittee’s

sunk costs and record of permit compliance; “[i]n practice, that

means that [the] EPA may withdraw a specification when

circumstances have changed radically or when the withdrawal

has only a minor impact on the operations envisioned (and

reliance interests generated) by the permit.” Id. at 18.

Because the EPA did not “balance” these “competing

considerations,” see id., but instead based its decision only on

the existence vel non of adverse environmental effects, Mingo

Logan cries foul.

In response, the EPA concedes that it did not consider

Mingo Logan’s reliance costs or its compliance history and, in

15

its view, neither the CWA nor the APA requires it to do so. It

contends, however, that we need not reach this issue because

Mingo Logan failed to make the argument to the agency or to

the district court and has thus forfeited it.

We agree with the EPA that the argument is forfeited and

doubly so. “Simple fairness to those who are engaged in the

tasks of administration, and to litigants, requires as a general

rule that courts should not topple over administrative decisions

unless the administrative body not only has erred but has erred

against objection made at the time appropriate under its

practice.” United States v. L.A. Tucker Truck Lines, Inc., 344

U.S. 33, 37 (1952). Thus, “[a]s a general rule, claims not

presented to [an] agency may not be made for the first time to a

reviewing court.” Omnipoint Corp. v. FCC, 78 F.3d 620, 635

(D.C. Cir. 1996); see also Nat’l Wildlife Fed. v. EPA, 286 F.3d

554, 562 (D.C. Cir. 2002) (“It is well established that issues not

raised in comments before the agency are waived and this

Court will not consider them.”); Vill. of Barrington v. Surface

Transp. Bd., 636 F.3d 650, 655 (D.C. Cir. 2011) (parties must

“forcefully present[] their arguments at the time appropriate

under [agency] practice or else waive the right to raise those

arguments on appeal” (alterations in original) (citations and

internal quotation marks omitted)). The same rule applies on

appeal from district court judgments. “Generally, an

argument not made in the lower tribunal is deemed forfeited

and will not be entertained [on appeal] absent exceptional

circumstances.” Flynn v. Comm’r, 269 F.3d 1064, 1068–69

(D.C. Cir. 2001) (internal quotation marks omitted).

Here, Mingo Logan did not argue the reliance-costs and

compliance-history issue before the EPA or in district court,

notwithstanding numerous opportunities to do so. Indeed, the

EPA’s process for finalizing its decision afforded Mingo

Logan numerous chances to make the claim. The EPA first

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published a Proposed Determination detailing its

environmental concerns in part as follows: “[C]onstruction of

Spruce No. 1 Mine as authorized would destroy streams and

habitat, cause significant degradation of on-site and

downstream water quality, and could therefore result in

unacceptable adverse impacts to wildlife and fishery

resources.” Proposed Determination to Prohibit, Restrict, or

Deny the Specification, or the Use for Specification (Including

Withdrawal of Specification), of an Area as a Disposal Site;

Spruce No. 1 Surface Mine, Logan County, WV, 75 Fed Reg.

16,788, 16,789 (Apr. 2, 2010). It then proposed to withdraw

specification of the Pigeonroost and Oldhouse Branch sites,

see id. at 16,805, and solicited comments on its proposal, see

id. at 16,807–08, thereby providing Mingo Logan notice and an

opportunity to put forward the factors that it believed the EPA

was required to consider—and had failed to consider—in

reaching its initial conclusion.

Mingo Logan responded to the Proposed Determination

with 172 pages of comments. Conspicuously absent

therefrom, however, was any argument that the EPA had to

balance the environmental effects against the costs Mingo

Logan had incurred in reliance on the permit before reaching a

final decision. 5 Equally absent was a detailing of these costs

5

Indeed, Mingo Logan’s comments in response to the EPA’s

Proposed Determination seemed to accept the EPA’s merits position

on the reliance-costs issue—that the EPA need base its decision on

environmental factors only. Mingo Logan argued that the EPA

could consider only the adverse environmental effects of the project

on the resources specifically listed in section 404(c)—(1) municipal

water supplies, (2) shellfishing areas/fisheries, (3) wildlife habitat

and (4) recreation areas. As Mingo Logan put it, “[t]he 404(c)

resources are therefore included to the exclusion of other resources,

areas and concerns. The familiar principle of expressio unius est

exclusio alterius dictates that when a statute includes particular

17

the EPA, under Mingo Logan’s theory, was required to

consider. Indeed, other than a single reference in introductory

factual material mentioning the “millions of dollars” Mingo

Logan allegedly spent “preparing the Spruce No. 1 site and

commencing its operations” after the permit had issued, Mingo

Logan never discussed what costs the EPA should consider or

how those costs stacked up against the environmental concerns

the EPA had identified. See Mingo Logan Coal Co.,

Comments in Response and in Opposition to the Proposed

Determination 33 (June 3, 2010), J.A. 403. That a detailed

statement of costs is missing here is unsurprising, of

course—Mingo Logan never attempted to argue that the EPA

was required to balance adverse effects against reliance costs

in the first place.

After reviewing these and other comments on the

Proposed Determination, an EPA Regional Director then

published a Recommended Determination, again proposing to

withdraw specification of the Pigeonroost Branch and

Oldhouse Branch sites and again inviting comments. See

Recommended Determination of the U.S. Environmental

Protection Agency Region III Pursuant to Section 404(c) of the

Clean Water Act (Sept. 24, 2010). Yet again, other than a

single reference in introductory material—“[n]ow, more than

three years after the issuance of the permit, as Mingo Logan is

actively mining the site in an attempt to recoup its decade-long

investment, EPA has declared that the impacts that it had

approved are now unacceptable, and seeks to revoke the

permit,” Mingo Logan Coal. Co., Comments in Response and

in Opposition to the Recommended Determination 2 (Nov. 29,

language to describe the scope of its application, this is to the

exclusion of other areas of application.” Mingo Logan Coal Co.,

Comments in Response and in Opposition to the Proposed

Determination 66 (June 3, 2010) (second emphasis added), J.A. 436.

18

2010)—Mingo Logan never claimed that the EPA had to

balance reliance costs against environmental effects 6 nor did it

detail those costs. Accordingly, by failing to make the claim

before the EPA, Mingo Logan forfeited it.

Once the EPA published its Final Determination

withdrawing specification of the disposal sites, Mingo Logan

filed suit, eventually composed of a fourteen-count amended

complaint. None of the counts alleged that the EPA’s Final

Determination was arbitrary and capricious because it had

6

In fact, in its comments responding to the Recommended

Determination, Mingo Logan did suggest for the first time that some

kind of balancing was required but, in listing the relevant factors, it

did not mention reliance costs: “ ‘Unacceptable,’ like ‘significant,’

is a relative term that must be weighed against the endangerment of

the species, the size of the project, and any economic benefit from

the project.” Mingo Logan Coal Co., Comments in Response and in

Opposition to the Recommended Determination 6 n.11 (Nov. 29,

2010). Moreover, even this argument was not presented in the

context of an arbitrary-and-capricious challenge. See id. at 6. Our

dissenting colleague nevertheless argues that it is sufficient to

preserve Mingo Logan’s costs claim. See Dissenting Op. at 16.

Not so. The comment says nothing whatsoever about reliance costs

so it cannot preserve Mingo Logan’s claim on that point. The

dissent asserts instead that it preserves some claim that a broader

balancing is required. See id. Mingo Logan (once again),

however, makes no such broad cost-balancing argument to us. It

argues that its reliance costs and compliance history should have

been considered—relying heavily on the language of Fox and the

permit’s role in encouraging reliance—but it never argues for the

kind of broad balancing the dissent suggests is applicable—e.g., the

EPA must consider “the harm to. . . coal miners who had been or

would be employed at the mine” or the fact that the mine could

“contribute millions of dollars to the local economy and lower the

price of electricity.” See id. at 7–8.

19

failed to weigh Mingo Logan’s reliance costs. Again, other

than one general allegation in the factual background—that

“[a]fter receiving its Permit, Mingo Logan spent millions of

dollars preparing the site and commencing construction and

operations,” Am. Compl. ¶ 141—Mingo Logan did not assert

an APA claim based on the EPA’s failure to consider its

reliance costs.

After we decided Mingo Logan II, the case returned to the

district court for consideration of the procedural issues. At the

district court’s request, Mingo Logan submitted a

supplemental brief summarizing the issues remaining for

review. In its brief, Mingo Logan asked the court to resolve

“four key questions of law”:

(1) “Can [the] EPA . . . base a section 404(c)

decision on downstream water quality impacts that

are regulated by West Virginia under section 402?”

(2) “Can [the] EPA base a section 404(c)

determination on impacts caused by mining features

other than the discharges authorized by Mingo

Logan’s section 404 permit?”

(3) “Assuming arguendo that [the] EPA can base its

section 404(c) veto on downstream water effects

regulated by section 402, can [the] EPA use water

quality standards other than West Virginia’s

duly-adopted water quality standards to determine

whether such effects are ‘unacceptable’ within the

meaning of section 404(c)?” and

(4) “After the Corps has issued a permit under

section 404(a), can [the] EPA act under section 404(c)

in the absence of substantial new information that was

not available prior to the issuance of the permit?”

20

Supplemental Br. in Supp. of Mingo Logan’s Mot. for Summ.

J. at 1–3, Mingo Logan III, 70 F. Supp. 3d 151 (No. 10-cv-

541), ECF No. 99. Once the court resolved these four

questions, according to Mingo Logan, it could move on to the

fifth and final question warranting review:

(5) “Did [the] EPA demonstrate, based on

substantial new information, that the discharges of fill

material authorized by the Corps permit would cause

‘unacceptable adverse effects’ on wildlife?”

Id. at 3.

Conspicuously absent from this list—yet again—is the

question Mingo Logan now presents for our review—whether

the EPA’s failure to consider Mingo Logan’s reliance costs and

compliance history renders its decision arbitrary and

capricious. It is also worth noting, for good measure, that in

an hours-long hearing on the procedural issues, covering over

one hundred pages of transcript, Mingo Logan never once

raised the reliance-costs claim to the district court. See

generally Transcript of 7/30/14 Hearing, Mingo Logan III, 70

F. Supp. 3d 151 (No. 10-cv-541). Unsurprisingly, having

never been presented with the question, the district court did

not address it.

This record notwithstanding, the dissent disagrees with

our conclusion that Mingo Logan forfeited its reliance-costs

claim. Dissenting Op. at 15. Our disagreement, it seems, is

attributable to two differences between us. First, he believes

that merely mentioning the “millions of dollars” allegedly

spent in reliance upon a permit is sufficient to preserve an

argument that the EPA must weigh those reliance costs against

environmental harms, see id. at 16–17, 20; we do not. But, as

recently noted in Encino Motorcars, LLC v. Navarro, “[t]he

extent to which [an agency] is obliged to address reliance will

21

be affected by the thoroughness of public comments it receives

on the issue. . . . An agency cannot be faulted for failing to

discuss at length matters only cursorily raised before it.” No.

15-415, 2016 WL 3369424, at *9 n.2 (2016) (Ginsburg, J.,

concurring). Our cases have likewise demanded that parties

“forcefully present[]” their arguments to the agency to preserve

them on appeal. Vill. of Barrington, 636 F.3d at 656. A

handful of offhand references to “millions of dollars” primarily

in introductory material—and never raised in the context of a

claim that the EPA must balance these costs against the

environmental effects it identified—is insufficient to preserve

the claim Mingo Logan now pursues on appeal.

Requiring a party to make a submission more detailed than

“millions of dollars,” moreover, is not a triumph of form over

function. Because Mingo Logan failed to detail its costs, the

EPA could not have “consider[ed] and justif[ied] the costs of

revoking the permit” as our colleague would require. See

Dissenting Op. at 17. Indeed, we do not quibble with his

general premise—and that of the many legal luminaries he

cites—that an agency should generally weigh the costs of its

action against its benefits. See id. at 5–6. But, on Mingo

Logan’s submission, the EPA would have to ask: Did Mingo

Logan rely on the permit to the tune of two “millions of

dollars” or two hundred “millions of dollars?” What portion

of the “millions” would in fact be lost by withdrawing two

disposal sites inasmuch as Mingo Logan can continue to

discharge spoil at the Seng Camp Creek site and neither the

Pigeonroost Branch site nor the Oldhouse Branch site had

become operational yet? The EPA’s obligation is to engage in

reasoned decisionmaking but Mingo Logan has an obligation

to explain why it believes its reliance costs must be considered

and to supply sufficient information about its costs to allow the

EPA to consider them. “[M]illions of dollars” is not enough.

22

In support of his view that Mingo Logan preserved its

reliance-costs claim, our dissenting colleague cites a number of

instances in the record where Mingo Logan asserted that the

EPA should be subject to an explanatory standard for

withdrawing a permit different from the standard for objecting

to one initially. See id. at 17–18. In our view, this argument

is distinct from Mingo Logan’s claim that reliance costs must

be considered. Because both arguments rely on language

from Fox, it is tempting to conflate them. But there are

important differences. In its reliance-costs argument, Mingo

Logan claims that the EPA was required to balance the costs it

incurred in reliance on the permit against the environmental

concerns the EPA identified. As the dissent suggests, in that

case the remedy would be to remand to the EPA to do the

necessary balancing. See id. at 22. As discussed, the remedy

informs in part our conclusion that Mingo Logan forfeited that

argument because it failed to detail the costs in a way that the

EPA could do what Mingo Logan now says it should do. See

supra at 15–20.

Mingo Logan’s inadequate-explanation argument, in

contrast, relies on Fox for a different argument. It claims that

the EPA is subject to a heightened standard to justify its

withdrawal decision and that, under that standard, the EPA’s

explanation is insufficient. The remedy regarding this

argument would be a remand to the EPA to better support

revocation but the EPA could not balance reliance costs against

environmental effects in doing so for the reasons already

discussed. It would simply have to do a better job explaining

why withdrawal was necessary in 2011 when it was not so in

2007. Like our colleague, we believe that Mingo Logan

sufficiently pressed this argument before the EPA and in

district court. Indeed, as the dissent points out, see Dissenting

Op. at 16–17, Mingo Logan consistently argued that a different

standard applied post-permit and that, accordingly, the EPA

23

had to identify substantial new information to support its

post-permit decision. Thus, this argument is properly before

us and we address it (and reject it), see infra 28–35. But

Mingo Logan’s post-permit heightened-standard claim does

not preserve its reliance-costs claim. They are different

claims supported by different arguments. Accordingly,

having been forfeited not once, but twice (and perhaps thrice),

we do not consider Mingo Logan’s reliance-costs claim for the

first time on appeal. 7

B. EPA’s Reliance on Proper Factors

Mingo Logan’s second argument is that the EPA’s

revocation decision was arbitrary and capricious because it

7

In reply to our dissenting colleague’s one-paragraph cri de

coeur characterizing Mingo Logan’s forfeiture as “entirely unfair”

based on EPA’s stance that costs are “irrelevant,” Dissenting Op. at

21, we have an equally pithy reply: A party has an obligation to

substantiate its position, including in the face of its opponent’s

rejection thereof. Cf. L.A. Tucker Truck Lines, Inc., 344 U.S. at 37

(agency’s “predetermined policy” does not absolve party of its

obligation to object thereto). Forfeiture here is hardly “unfair” to

Mingo Logan but, in any event, its minimal proof of its costs—as far

as we can tell—mirrors their de minimis nature. And even if the

EPA could be tagged with the “bait-and-switch” charge—a

proposition we roundly reject—Mingo Logan’s failure to prove up

its costs on review by the district court should mute its lament. In

the end, Mingo Logan at no point—not before the EPA nor in district

court—made any effort to describe its costs or make an argument

about them. In that light, Mingo Logan can hardly now complain

about unfairness. Moreover, as we have noted, supra nn.5–6,

Mingo Logan effectively accepted the EPA’s position on the

relevance of its reliance costs. It is hardly “unfair” to expect Mingo

Logan to have raised whatever arguments it might have about the

EPA’s position before the EPA itself.

24

“relied on [a] factor[] which Congress has not intended it to

consider,” see State Farm, 463 U.S. at 43—water quality

downstream from the valley fill. As mentioned, the EPA

offered multiple bases for its decision in its Final

Determination. It first identified adverse effects to wildlife

within the footprint of the valley fills—that is, the area where

the spoil was in fact to be disposed of. It then identified

adverse effects to wildlife downstream from the fills

attributable to increased levels of selenium and conductivity8

in downstream water.

Mingo Logan argues that the EPA cannot rely on

downstream water quality as a basis for finding adverse

environmental effects. Because the “Congress has delegated

responsibility for considering water quality to [West Virginia],

not [the] EPA,” Appellant’s Br. 47, and West Virginia has

granted Mingo Logan a section 402 permit that governs

downstream water quality, Mingo Logan argues that the EPA

has intruded upon West Virginia’s exclusive regulatory power

over its “navigable waters,” see 33 U.S.C. § 1342(b). Mingo

Logan also contends that the EPA impermissibly applied its

own water-quality standards in considering downstream

effects. The application of such “ad hoc” standards,

according to Mingo Logan, is arbitrary and capricious.

Appellant’s Br. 56–57.

8

Selenium is “a naturally occurring chemical element that is

an essential micronutrient, but can also have toxic effects following

exposure to excessive amounts.” Final Determination, at 51.

“Conductivity is the ability of a solution to carry an electric current

at a specific temperature” and “is an excellent indicator of the total

concentration of all ions” in a given solution. Id. at 58–59.

Salinity—“the amount of dissolved salt in a given body of

water”—is “often expressed in terms of specific conductivity.” Id.

at 58.

25

We reject this argument for several reasons. As an initial

matter, section 404(c) allows the EPA to consider the effects of

spoil disposal downstream from the fill itself and downstream

water quality may enter the equation. The statute authorizes

the Administrator “to deny or restrict the use of any defined

area for specification” if he determines “that the discharge of

such materials into such area will have an unacceptable

adverse effect on municipal water supplies, shellfish beds and

fishery areas . . . , wildlife, or recreational areas.” 33 U.S.C.

§ 1344(c). The reference to “municipal water supplies,” id., is

telling; how can the EPA assess whether a valley fill will have

an “unacceptable adverse effect on municipal water supplies”

without considering the effects of the valley fill on downstream

water quality? We have little trouble concluding that, as part

of the EPA’s overall authority, section 404(c) authorizes it to

assess the effects of the fill beyond the fill’s footprint and that

nothing in the statute prohibits water quality from being part of

that assessment.

Mingo Logan essentially concedes the general point; 9 the

real problem, it claims, is that the state of West Virginia has

already determined that the fills will not cause water-quality

problems downstream. Because the Congress has granted

states power to regulate their own water quality under section

402, once a state has signed off on a project by granting a

section 402 permit, Mingo Logan argues, the EPA is not

authorized to reassess water quality under section 404(c) using

its own ad hoc standards. If the EPA does so, Mingo Logan

contends, it impermissibly traverses the Congress’s intent by

ignoring the bright line between section 402 regulation and

section 404 regulation and raises federalism concerns to boot.

9

See Appellant’s Reply Br. 26 (“Mingo Logan [does not]

deny that, in the absence of authorized State action, [the] EPA may

take downstream water quality into account . . . .”).

26

Mingo Logan’s argument fundamentally misinterprets

what the EPA does in evaluating changes in water quality

attributable to the disposal of spoil in designated streams. It is

true that section 402 grants a qualifying state broad authority to

regulate its water quality, see 33 U.S.C. § 1342, and that

regulation under sections 402 and 404 is generally distinct, see

Coeur Alaska, Inc., 557 U.S. at 274, 276–77. As the district

court concluded, however, there is an important difference

between “regulating” pollutant discharge under section 402

and identifying unacceptable adverse effects on four specific

categories of resources as a result of spoil disposal under

section 404(c). See Mingo Logan III, 70 F. Supp. 3d at 177.

Indeed, we do not take issue with Mingo Logan’s contention

that, here, the primary authority under section 402 lies with

West Virginia. Under the NPDES program, West Virginia

permits the discharge of water from sediment ponds into

natural streams based upon state water-quality criteria and sets

conditions on those discharges to manage the flow of

pollutants into natural waters within its jurisdiction. See 33

U.S.C. § 1342. In contrast, the EPA does none of these

things; it does not intrude on West Virginia’s authority to

regulate water quality under section 402 because the EPA is

not regulating the discharge of pollutants into West Virginia

waters downstream from the fill. It is instead assessing

whether discharging spoil into a particular stream will produce

“unacceptable adverse effect[s]” on wildlife. Id. § 1344(c).

And it evaluates the effects of that spoil—both inside and

outside the fill’s footprint—in making its assessment,

including the changes the spoil might bring about in

downstream water quality.

This raises a third, related point. Although Mingo Logan

makes much of the “EPA’s consideration of water quality,” see

Appellant’s Br. 53, the EPA did not base its revocation

decision on an evaluation of downstream water quality per se;

27

rather, evaluating downstream water quality was just one step

in its process of evaluating “unacceptable adverse effect[s]” on

wildlife under section 404(c), see 33 U.S.C. § 1344(c). The

EPA must connect conclusions it makes about downstream

water to adverse effects on the specific resources listed in

section 404(c)—municipal water supplies, shellfishing areas or

fisheries, wildlife or recreational areas. See id. It satisfied

this obligation; it pinpointed the requisite connection between

its water quality assessment and its adverse-effects conclusions

regarding section 404(c) resources. 10 Specifically, it relied on

studies showing that selenium levels above five micrograms

per liter produce harmful effects on macroinvertebrates, see

Final Determination, at 60–61, and fish, see id. at 71–72, which

in turn results in negative food-web 11 implications for the

broader ecosystem, see id. at 68. And it included detailed

information—including new information based on actual data

from the Seng Camp Creek site, see infra at 30—supporting its

conclusion that a significant risk of selenium levels regularly

exceeding five micrograms per liter would result at the

Pigeonroost Branch and Oldhouse Branch sites. See Final

Determination, at 52–58. The EPA also explained why

10

The EPA specifically acknowledged that its conclusions

about adverse effects on wildlife were “not dependent on a

conclusion that West Virginia’s water quality standards will be

violated at or downstream of the site.” Final Determination, at 51.

It thus explicitly recognized that its consideration of downstream

water quality was only an intermediate step in its section 404

environmental analysis.

11

The food web refers to the interconnected manner in which

species in an ecosystem act as food sources for others. See Final

Determination, at 32–33; see also Nat’l Ass’n of Home Builders v.

Babbitt, 130 F.3d 1041, 1052 n.11 (D.C. Cir. 1997) (citing E.O

WILSON, THE DIVERSITY OF LIFE 308 (2d ed. 1992)).

28

elevated levels of conductivity it anticipated to occur

downstream were harmful, citing “an accepted and peer

reviewed approach” for measuring the effects of conductivity

on macroinvertebrates, see id. at 65–67. In addition, it

explained the fact that conductivity in the range it expected

would support golden algae growth, which in turn would have

negative effects on salamanders and fish, see id. at 69–71. In

sum, the EPA’s consideration of downstream water quality as a

means of evaluating the project’s adverse effects on wildlife

was not arbitrary and capricious; rather, it was the product of

reasoned decisionmaking supported by evidence in the record

and based upon the EPA’s technical expertise.

C. EPA’s Explanation of its “Volte Face”

Mingo Logan’s final argument is that the EPA failed to

adequately explain its revocation decision given that it allowed

the 404 permit to proceed four years earlier. Mingo Logan

argues that this change triggers the “more detailed”

justification standard discussed in Fox, 556 U.S. at 515, and

because the “EPA cannot point to any new information—let

alone substantial or more detailed information—that

overcomes” its original decision not to veto the permit,

Appellant’s Br. 32, we must set its Final Determination aside.

Mingo Logan argues further that even under the ordinary APA

explanation standard articulated in State Farm, 463 U.S. at 43,

the EPA has failed to adequately explain its decision to revoke;

the “unacceptable” effects the EPA identified, Mingo Logan

claims, typically result from any large-scale surface coal mine.

The district court rejected Mingo Logan’s assertion that a

more detailed justification standard applies, concluding that,

notwithstanding the EPA’s original acquiescence, it did not

amount to a “policy”; accordingly, the EPA’s subsequent

withdrawal decision was not a change of course triggering the

29

more detailed Fox standard. Mingo Logan III, 70 F. Supp. 3d

at 163–68. We need not resolve the question of whether a

“more detailed” explanatory standard applies here because we

find the EPA’s explanation adequate even assuming arguendo

that it was required to supply “a more detailed justification” for

its revocation decision, see Fox, 556 U.S. at 515. It

adequately explained how new information arising after the

404 permit issued informed its conclusion that the project

would result in “unacceptable adverse effect[s]” to wildlife.

See 33 U.S.C. § 1344(c). Indeed, the EPA acknowledged

early on in its Final Determination that the game had changed.

Its comments on the matter are worth quoting at length:

Throughout the history of the Spruce No. 1 Surface

Mine . . . Permit, [the] EPA has raised concerns

regarding adverse impacts to the environment.

Additional data and information, including

peer-reviewed scientific studies of the ecoregion,

have become available since permit issuance. The

peer-reviewed literature now reflect[s] a growing

consensus of the importance of headwater streams[]

[and] a growing concern about the adverse ecological

effects of mountaintop removal mining, specifically

with regard to the effects of elevated levels of total

dissolved solids discharged by mining operations on

downstream aquatic ecosystems . . . .

Final Determination, at 8. The EPA then went on to

describe—in detail—its assessment of the “unacceptable

adverse effect[s]” both within the fills’ footprint and

downstream from the valley fill.

Mingo Logan’s challenge to the adequacy of the EPA’s

justification focuses exclusively on the EPA’s discussion of

adverse effects in the valley fills’ footprint; it does not contest

30

the sufficiency of the EPA’s downstream-effects

justification. 12 And for good reason—the EPA plainly relied

on extensive post-permit information in determining that the

water-chemistry changes wrought by the fills would negatively

affect wildlife. The EPA’s conclusions that increased levels

of selenium and conductivity would cause “unacceptable

adverse effect[s]” to wildlife were based upon data collected

from an adjacent mine from 2007 to 2010, and—most relevant

here—from water sources handling outflow from the Seng

Camp Creek disposal site, the only site that became operational

after the 404 permit was originally issued. As far as

substantial new information goes, it is difficult to think of more

salient post-permit data than that collected from the very mine

under consideration. The post-permit data from the Seng

Camp Creek site and the adjacent mine indicated that selenium

in waters flowing from these sites regularly exceeded the

selenium levels the EPA determined would produce harmful

effects on wildlife. Moreover, the EPA’s discussion of how

changes in water chemistry would negatively affect wildlife

was extensive and also relied on scientific studies published

post-permit, as well as on post-permit data regarding the risk

factors for golden-algae growth and its associated adverse

environmental effects. These explanations relying on new

data are sufficient to satisfy the more detailed explanatory

obligation discussed by Fox. The EPA’s “explanation” for

“disregarding facts and circumstances that underlay or were

engendered by the prior policy” was “reasoned,” Fox, 556 U.S.

at 515–16—new data from the Seng Camp Creek site

confirmed that selenium and conductivity levels were rising to

potentially harmful levels and would cause significant wildlife

12

As discussed, however, Mingo Logan does challenge the

EPA’s authority to consider downstream water quality at all. See

supra at 23–24.

31

degradation if additional valley fills were constructed at

Pigeonroost Branch and Oldhouse Branch.

The same is true of the EPA’s explanations of the

unacceptable adverse effects on wildlife within the valley fills’

footprint. Although Mingo Logan argues that the EPA’s

explanation fails even the basic APA arbitrary-and-capricious

standard because the allegedly “unacceptable” environmental

effects the EPA identified are the “routine” environmental

impacts associated with any dredge-and-fill discharge,

Appellant’s Br. 44, the EPA explained why it viewed the

adverse effects on wildlife as “significant” and therefore

“unacceptable,” see 40 C.F.R. § 231.2(e), and how new

information developed after the permit issued reasonably

informed its conclusions. The following discussion

summarizes the EPA’s multi-page explanation.

The EPA first noted that the sheer size of the Spruce No. 1

Mine project rebutted Mingo Logan’s characterization of the

project’s effects on wildlife as routine. As the EPA explained,

“[t]he Spruce No. 1 Mine . . . is one of the largest mountaintop

mining projects ever authorized in West Virginia,” affecting

approximately 3.5 square miles and resulting in the burial of

approximately 7.48 miles of high-quality streams. Final

Determination, at 15. “By way of comparison,” the EPA

noted, “the project area would take up a sizeable portion of the

downtown area of Pittsburgh, PA.” Id. Relatedly, the EPA

cited the large number of species within the proposed fill,

noting that watersheds within the Central Appalachian region

are some of the continent’s most biologically diverse and that

the Pigeonroost Branch and Oldhouse Branch watersheds are

no exception. Id. at 30–31, 47. The EPA gave great weight

to both of these factors, explaining that a large part of the

“significance” of the adverse environmental effects it predicted

results from such a large-scale ecosystem disruption in one of

32

most biologically diverse areas in the country. See id. at 30–

31, 50.

The EPA also detailed the adverse effects—and the

implications for the broader ecosystem—on specific categories

of wildlife. The EPA explained that Pigeonroost Branch and

Oldhouse Branch are home to a particularly diverse group of

macroinvertebrates and wide-scale elimination of these

populations would have a significant negative impact on the

broader “faunal food web” given that macroinvertebrates form

its foundation. Id. at 47, 49–50. The EPA further explained

how burying 6.6 miles 13 of stream will affect other wildlife

directly—salamanders, fish and water-dependent birds. 14 The

EPA estimated that roughly 250,000 salamanders would be

killed within the fills’ footprint (5–6 salamanders per square

meter) and that the large-scale loss of “a key component of the

aquatic food web” will have “broader food web implications,

as they . . . serve as prey for numerous terrestrial and aquatic

species found within the Spruce No. 1 Mine site, including

fish, snakes, birds, mammals, turtles, frogs, crayfish and other

salamanders.” Id. at 48. The EPA also explained that

13

Although the Spruce No. 1 mine called for filling a total of

7.48 miles of streams with spoil, see supra at 31, that number

included the valley fill at the Seng Camp Creek site. The valley fills

at the Pigeonroost Branch and Oldhouse Branch sites would fill 6.6

miles of stream.

14

The district court found that the EPA’s reliance upon the

fills’ effects on a water-dependent bird—the Louisiana

waterthrush—“dances close to the line of what is reasonable” given

that the bird has never been observed in the project area. Mingo

Logan III, 70 F. Supp. 3d at 171 n.23. The EPA has wisely stepped

back from its reliance on this particular adverse effect as necessary to

support its decision. See Appellee’s Br. 45.

33

sampling data suggested five populations of fish would be

directly—and adversely—affected by the fill. Id. at 38–39,

48–49.

Moreover, these explanations were not, as Mingo Logan

suggests, Appellant’s Br. 44–45, based purely on information

the EPA had at its disposal before the 404 permit issued.

Rather, it relied on a variety of post-permit data to support its

conclusions and, where relevant, explained how circumstances

had changed over time.

First, the EPA’s analysis cited several post-permit studies

suggesting headwater streams like Pigeonroost Branch and

Oldhouse Branch play an outsized role in the creation and

preservation of a robust and diverse regional ecosystem. As

the EPA explained, after the permit was issued, “the scientific

literature reflected a growing consensus of the importance of

headwater streams.” Final Determination, at 20. “Many

[post- permit] studies,” the EPA went on, “now point to the

role headwater streams play in the transport of water,

sediments, organic matter, nutrients, and organisms to

downstream environments; their use by organisms for

spawning or refugia; and their contribution to regional

biodiversity.” Id.

This general shift in perspective on the importance of

headwater streams—undergirded by post-permit scientific

evidence—permeates the EPA’s entire analysis of the

environmental effects of the valley fill within the fills’

footprint. The EPA concluded that many of the direct adverse

effects on wildlife within the disposal area are “unacceptable”

because Pigeonroost Branch and Oldhouse Branch are “some

of the last remaining streams within the Headwaters Spruce

Fork sub-watershed and the larger Coal River sub-basin that

represent ‘least-disturbed’ conditions and habitat that is

34

essential for many species in the watershed.” Id. at 49.

Consequently, the EPA explained, the streams “perform

critical hydrologic and biological functions, support diverse

and productive biological communities, contribute to

prevention of further degradation of downstream waters, and

play an important role within” the larger regional ecosystem.

Id. Given “the evidence that these streams are some of the

last, rare and important high quality streams in the watershed,”

the EPA concluded that burying 6.6 miles of the streams with

spoil would produce an “adverse impact . . . that the aquatic

ecosystem cannot afford.” Id. at 50.

Second, the EPA discussed additional post-permit

evidence suggesting that its original estimates about the return

of salamanders to the area were flawed. Pre-permit density

measurements suggested that the spoil would kill

approximately 250,000 salamanders within the fill area.

According to the EPA, “it had been assumed that species

populating these waters would return, sometimes years later, to

reestablish a community.” Appellee’s Br. 43–44.

Post-permit data suggested, however, that even after twenty

years, salamanders were not returning as expected to

sedimentation ditches generated by now-closed West Virginia

coal mines. See Final Determination, at 48.

Third, although pre-permit data suggested few fish would

be affected by the project, post-permit data suggested

additional species would experience adverse effects. As the

EPA explained, sampling for the environmental study of the

project suggested only a limited number of species lived in the

Pigeonroost Branch and Oldhouse Branch streams. Id. at 38.

The EPA concluded, however, that the pre-permit data were

not reliable because the sampling had been conducted during a

drought period. See id. It cited post-permit fish sampling

data from 2008 and 2009 that “revealed a fish assemblage” in

35

the two streams. Id. Specifically, “[m]ottled sculpin, as well

as sporadic populations of smallmouth bass and stonerollers

were collected in Pigeonroost Branch,” whereas “only

blacknose dace and creek chubs” had been found in the stream

in 1999. Id. at 38, 39. And although “[n]o samples were

collected in Oldhouse Branch” in 1999, the data indicated that

blacknose dace and creek chubs also lived in that stream. Id.

at 38–39.

Thus, assuming arguendo that the EPA was subject to the

“more detailed justification” standard described in Fox, 556

U.S. at 515, we conclude that its Final Determination satisfied

that requirement. It plainly relied upon new data—including

data from the Spruce No. 1 Mine site itself—and explained the

relevance of these data in concluding that the project would

have unacceptable adverse effects on wildlife downstream

from the fill sites. It also adequately explained how the valley

fill would have an unacceptable adverse effect on wildlife

within the fill and it specifically explained the new

“consensus” on the importance of headwater streams, id. at 20,

new scientific evidence about salamander repopulation, and

new, more representative data about the fish species living in

the fill area in doing so.

A few words in closing are in order. First, we do not hold

that the EPA is generally exempt from considering costs in

evaluating whether to withdraw a previously approved

disposal site under section 404(c). We need not and do not

decide precisely what the EPA may and must consider in

making a post-permit withdrawal decision; we hold only that it

is not expected to balance costs never presented to it. Second,

we do not hold whether the EPA’s site withdrawal after the

Corps has issued a 404 permit must always satisfy the more

detailed justification standard articulated in Fox, 556 U.S. at

515–16. Again, we need not and do not decide that question

36

because, even assuming the Fox standard applies, the EPA’s

explanation satisfies it. Finally, we note that post-permit

withdrawal under section 404(c) is a mighty power and its

exercise will perhaps inevitably leave a permittee feeling as if

the rug has been pulled out from under it. Nonetheless, this

power is one the Congress has authorized the EPA to exercise

and where, as here, the EPA has adequately explained why

mine spoil disposal at two sites would cause “unacceptable

adverse effect[s]” on “wildlife,” 33 U.S.C. § 1344(c), we must

uphold its decision.

For the foregoing reasons, the judgment of the district

court is affirmed.

So ordered.

KAVANAUGH, Circuit Judge, dissenting: EPA must

consider both costs and benefits before it vetoes or revokes a

permit under Section 404 of the Clean Water Act. That much

is common sense and settled law. See Michigan v. EPA, 135

S. Ct. 2699 (2015). Here, however, EPA revoked a Clean

Water Act permit without considering the costs of doing so.

For that reason, EPA’s decision must be vacated. In my view,

EPA must go back to the drawing board and weigh both the

costs and benefits of revoking the permit before making its

decision.

The case concerns Mingo Logan, a coal mining company

that planned to engage in surface coal mining in West

Virginia. Under the Clean Water Act, the Company first

needed to obtain what is known as a Section 404 permit. The

Section 404 permit would allow Mingo Logan to dump into

nearby streams the excess rubble generated by its surface

mining operation – known under the Act as “fill material.”

Mingo Logan’s ability to dispose of fill material into those

streams was critical to the viability of the Company’s planned

coal mining operation.

By statute, the Army Corps of Engineers oversees

Section 404 permits. The Corps has the power to grant and

revoke permits. To grant a Section 404 permit, the Corps

must determine that the permit application meets guidelines

developed jointly by the Corps and EPA. Among other

things, the guidelines require the permit applicant to show that

its planned disposal of fill material minimizes environmental

impacts, to the extent practicable. The Corps may also revoke

a previously issued Section 404 permit, but only after the

Corps considers a variety of factors such as the permittee’s

investment-backed reliance on the permit.

In addition, Section 404(c) of the Clean Water Act grants

EPA concurrent authority to (i) veto the issuance of a permit

2

or (ii) revoke a previously issued permit.1 To either veto or

revoke a permit, EPA must determine that a permittee’s

disposal of fill material at a given site “will have an

unacceptable adverse effect on municipal water supplies,

shellfish beds and fishery areas (including spawning and

breeding areas), wildlife, or recreational areas.” 33 U.S.C.

§ 1344(c) (emphasis added).

In 2007, Mingo Logan obtained a Section 404 permit

from the Corps. By its terms, the permit allowed the

Company to dispose of fill material for 24 years at three

disposal sites, subject to various conditions and mitigation

measures. Understandably relying on that permit, Mingo

Logan subsequently spent millions of dollars on the mining

operation and hired coal miners and other employees.

In 2007, EPA could have exercised its Section 404(c)

authority to veto the issuance of Mingo Logan’s permit, but

EPA chose not to do so. In 2011, EPA reversed course and

exercised its Section 404(c) authority to revoke Mingo

Logan’s permit and shut down the mining operation.

EPA provided one reason for its 2011 revocation

decision: Contrary to what it had concluded four years

earlier, EPA now believed that Mingo Logan’s coal mining

operation would have an “unacceptable adverse effect” on

certain animals, particularly certain species of salamanders,

fish, and birds. (There was no stated risk to humans or to

drinking water from Mingo Logan’s disposal of fill material

1

To be precise, EPA’s authority is to prohibit specification of

disposal sites for fill material. See Mingo Logan Coal Co. v. EPA,

714 F.3d 608 (D.C. Cir. 2013). In practice, that authority is often

tantamount to authority to veto or revoke permits. For ease of

reference, I therefore will refer to EPA’s Section 404(c) authority

as a power to veto or revoke permits.

3

into the streams.) In EPA’s view, revoking Mingo Logan’s

permit would mitigate the adverse effect on animals.

Mingo Logan complains that EPA considered only the

benefits and did not consider any of the costs associated with

revoking Mingo Logan’s permit. Those costs encompassed,

for example, the negative financial impacts on Mingo Logan’s

owners and shareholders, including those who relied on the

permit; on the coal miners who would lose their jobs; on the

collateral businesses that sold services and products for the

mining operation or otherwise depended on the mining

operation; on the consumers who pay less for electricity when

additional sources of energy are available; and on West

Virginia’s tax revenues. According to Mingo Logan, EPA

also failed to provide the “more detailed justification”

required by Supreme Court precedent when an agency

changes course and revokes a previously issued permit on

which the permittee had relied. FCC v. Fox Television

Stations, Inc., 556 U.S. 502, 515 (2009).

The bottom line is that EPA considered the benefits to

animals of revoking the permit, but EPA never considered the

costs to humans – coal miners, Mingo Logan’s shareholders,

local businesses, and the like – of revoking the permit. In my

view, EPA’s utterly one-sided analysis did not come close to

satisfying the agency’s duty under the Administrative

Procedure Act and relevant Supreme Court precedents to

consider and justify the costs of revoking Mingo Logan’s

previously issued permit.

To be clear, I am not here deciding how EPA should

weigh the costs and benefits of revoking the permit, or what

outcome the agency should reach when it conducts that

analysis. Cf. Michigan, 135 S. Ct. at 2711, slip op. at 14

(same); White Stallion Energy Center, LLC v. EPA, 748 F.3d

4

1222, 1266 (D.C. Cir. 2014) (Kavanaugh, J., dissenting)

(same). I am merely making the narrow but critical point that

EPA must in fact consider both costs and benefits before

deciding whether to revoke the permit. See Michigan, 135 S.

Ct. 2699. EPA did not do so here. Under the Administrative

Procedure Act and applicable Supreme Court precedent, that

is not acceptable. I respectfully dissent.

I

By omitting consideration of costs, EPA’s decision

revoking Mingo Logan’s permit was doubly deficient under

the Administrative Procedure Act. First, EPA failed its most

basic duty under the Administrative Procedure Act to consider

all of the relevant factors, including costs. Second, because

EPA changed its position by revoking a previously issued

permit, EPA not only had to consider costs, but also had to

provide a more detailed justification for its change in position.

A

It is a fundamental principle of administrative law that

federal “administrative agencies are required to engage in

reasoned decisionmaking.” Michigan v. EPA, 135 S. Ct.

2699, 2706, slip op. at 5 (2015) (internal quotation marks

omitted). To engage in reasoned decisionmaking, an agency

must consider all of the factors that are relevant to the

particular decision facing the agency. Id. In other words, an

agency must consider each “important aspect of the problem.”

Motor Vehicle Manufacturers Association of the United States

v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29,

43 (1983). An agency must also articulate a “rational

connection” between the factors considered and the choice

made. Id. In short, agency action must be “reasonable and

reasonably explained.” Communities for a Better

Environment v. EPA, 748 F.3d 333, 335 (D.C. Cir. 2014).

5

As a general rule, the costs of an agency’s action are a

relevant factor that the agency must consider before deciding

whether to act. See Michigan, 135 S. Ct. at 2707, slip op. at

7. In Michigan v. EPA, the Supreme Court was unanimous in

articulating this principle. The Court divided 5-4 only on

whether the agency had in fact considered costs. Id. at 2714,

slip op. at 2-3 (Kagan, J., dissenting) (“I agree with the

majority – let there be no doubt about this – that EPA’s power

plant regulation would be unreasonable if the Agency gave

cost no thought at all.”) (internal quotation marks and

brackets omitted).

An agency must consider costs because reasoned

decisionmaking requires assessing whether a proposed action

would do more good than harm. As the Supreme Court has

emphasized, the costs imposed by the agency’s action are an

integral part of that calculus: “Consideration of cost reflects

the understanding that reasonable regulation ordinarily

requires paying attention to the advantages and the

disadvantages of agency decisions.” Id. at 2707, slip op. at 7

(majority opinion).

Leading jurists and scholars have long recognized that

consideration of costs is an essential component of reasoned

decisionmaking under the Administrative Procedure Act.

Consider the following:

 Justice Kagan: “[W]hat does it take in a statute

to make us say, look, Congress has demanded

that the regulation here occur without any

attention to costs? In other words, essentially

Congress has demanded that the regulation has

occurred in a fundamentally silly way.” Tr. of

Oral Arg. at 13, EPA v. EME Homer City

Generation, L.P., 134 S. Ct. 1584 (2014).

6

 Justice Breyer: “[I]t would make no sense to

require [power] plants to spend billions to save

one more fish or plankton. That is so even if the

industry might somehow afford those billions.”

Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208,

232-33 (2009) (opinion of Breyer, J.) (internal

quotation marks and citation omitted).

 Justice Breyer: Every agency choice “requires a

decisionmaker to weigh advantages against

disadvantages, and disadvantages can be seen in

terms of (often quantifiable) costs.” Id. at 232.

 Professor Sunstein: “A rational system of

regulation looks not at the magnitude of the risk

alone, but assesses the risk in comparison to the

costs.” Cass R. Sunstein, Interpreting Statutes in

the Regulatory State, 103 HARV. L. REV. 405,

493 (1989).

 Professor Pierce: “All individuals and

institutions naturally and instinctively consider

costs in making any important decision. . . . [I]t is

often impossible for a regulatory agency to make

a rational decision without considering costs in

some way.” Richard J. Pierce, Jr., The

Appropriate Role of Costs in Environmental

Regulation, 54 ADMIN. L. REV. 1237, 1247

(2002).

To be sure, Congress may bar an agency from

considering the costs of certain actions. See Whitman v.

American Trucking Associations, 531 U.S. 457, 464-71

(2001). But absent a congressional directive to disregard

costs, common administrative practice and common sense

require an agency to consider the costs and benefits of its

proposed actions, and to reasonably decide and explain

whether the benefits outweigh the costs.

7

In this case, instead of considering the costs and benefits

of revoking Mingo Logan’s permit, EPA focused like a laser

on one benefit that would flow from the revocation – namely,

the prevention of an adverse effect on a few animals, such as

salamanders, fish, and birds in and near the disposal sites.

(To reiterate, there was no stated risk to humans or to drinking

water from Mingo Logan’s disposal of fill material into the

streams.)

But EPA ignored the costs to humans caused by the

revocation of Mingo Logan’s permit, such as the harm to

Mingo Logan’s owners and shareholders and to the coal

miners who had been or would be employed at the mine. By

ignoring costs, EPA in essence discounted the costs to

humans all the way to zero. That’s how EPA was able to

conclude that the harm to some salamanders, fish, and birds

from the mining operation outweighed the loss of jobs for

hundreds of coal miners, the financial harm to Mingo Logan’s

owners and shareholders, and the many other costs from

revoking the permit.

EPA ignored the costs to humans because, in EPA’s

view, Congress prohibited the agency from considering costs

under Section 404(c). Section 404(c), to repeat, authorizes

EPA to prohibit the disposal of fill material into any disposal

site if EPA determines that the disposal “will have an

unacceptable adverse effect on municipal water supplies,

shellfish beds and fishery areas (including spawning and

breeding areas), wildlife, or recreational areas.” 33 U.S.C.

§ 1344(c) (emphasis added).

According to EPA, the phrase “unacceptable adverse

effect” bars EPA from considering costs, or may be

reasonably construed to allow EPA to ignore costs. But EPA

is badly mistaken. Far from prohibiting EPA from

8

considering the costs of its actions, Section 404(c) reinforces

the agency’s bedrock duty under the Administrative

Procedure Act to consider costs.

The word “unacceptable” is capacious and necessarily

encompasses consideration of costs. Like the word

“appropriate” at issue in Michigan v. EPA, the words

“acceptable” and “unacceptable” are commonly understood to

necessitate a balancing of costs and benefits. See Michigan,

135 S. Ct. at 2707-08, slip op. at 6-8; cf. Turner v. Murray,

476 U.S. 28, 36 (1986) (“[W]e find the risk that racial

prejudice may have infected petitioner’s capital sentencing

unacceptable in light of the ease with which that risk could

have been minimized.”).

To illustrate, suppose that the disposal of fill material

from a surface mining project is certain to harm some

salamanders. Does the disposal activity have an

“unacceptable adverse effect” on salamanders? The answer

would presumably be yes if the disposal activity could be

prohibited at zero cost – say, if the fill material could just as

easily be dumped at another site devoid of salamanders. On

the other hand, the answer would presumably be no if the

mining project would contribute millions of dollars to the

local economy and lower the price of electricity. In some

cases, the question of whether the adverse effect on

salamanders is “unacceptable” may be a close call. But the

point for present purposes is that the balance of the benefits of

reducing the adverse effect on animals and the costs of

shutting down the mining operation plainly influences the

determination whether or not the adverse effect is

“unacceptable.”

Indeed, consider an analogous phrase recently analyzed

by the Supreme Court: undue burden. See Whole Woman’s

9

Health v. Hellerstedt, __ U.S. __ (June 27, 2016). The

Supreme Court explained that in assessing whether a law

constitutes an “undue burden” on abortion access, courts must

“consider the burdens a law imposes on abortion access

together with the benefits those laws confer.” Id. at __, slip

op. at 19-20. If the word “undue” at issue in Whole Woman’s

Health requires a balancing of costs and benefits, the word

“unacceptable” at issue here similarly requires a balancing of

costs and benefits.

Moreover, even if the word “unacceptable” does not

unambiguously require EPA to consider costs, it certainly

allows EPA to consider costs. Cf. Michigan v. EPA, 213 F.3d

663, 674-79 (D.C. Cir. 2000) (per curiam) (statutory term

“significant” allowed EPA to consider costs). And if the

word “unacceptable” allows EPA to consider costs, it is

necessarily unreasonable for EPA not to consider costs. See

Michigan, 135 S. Ct. at 2706-08, slip op. at 5-9. That

proposition follows from the general reasonableness principle

embodied in State Farm and Chevron: To act reasonably, an

agency must consider the costs of its actions unless Congress

has barred consideration of costs.

So whether EPA’s interpretation of Section 404(c) is

analyzed under Chevron step one or Chevron step two or

State Farm, the conclusion is the same: In order to act

reasonably, EPA must consider costs before exercising its

Section 404(c) authority to veto or revoke a permit.

EPA responds that Section 404(c) is more akin to the

statutory provision at issue in Whitman v. American Trucking

than the provision at issue in the Supreme Court’s Michigan

v. EPA case. Whitman dealt with a provision of the Clean Air

Act that directed EPA to set ambient air quality standards at

levels “requisite to protect the public health” with “an

10

adequate margin of safety.” 42 U.S.C. § 7409(b)(1). The

Court said that the statute precluded EPA from considering

costs.

EPA advanced the same Whitman-based argument in

Michigan v. EPA. It failed. Here too, EPA’s reliance on

Whitman is misplaced. In Whitman, the Court explained that

the statute specifically focused on “public health” and

“safety” – two factors on the other side of the balance from

costs. See Whitman, 531 U.S. at 468-69. The Court found it

“implausible” that Congress – through the modest words

“requisite” and “adequate margin” – granted EPA the

significant power “to determine whether implementation costs

should moderate national air quality standards.” Whitman,

531 U.S. at 468.

Here, by contrast, Section 404(c)’s text – in particular the

word “unacceptable” – contemplates that costs must be

considered. So does the statutory context and purpose: After

all, it would be surprising – shocking, truth be told – if EPA

did not have to consider costs under Section 404(c) when

deciding whether to veto or revoke permits.

In short, bedrock principles of administrative law, as well

as the terms of the statute setting forth EPA’s substantive

authority to revoke permits, required EPA to consider the

costs of revoking Mingo Logan’s permit. By failing to do so,

EPA ignored “an important aspect of the problem.” State

Farm, 463 U.S. at 43.

B

In this case, moreover, EPA’s failure to consider costs

was doubly problematic because EPA changed its position in

2011 by revoking a permit previously issued in 2007. It

would be bad enough if EPA had merely blocked issuance of

11

a Section 404 permit without considering costs. But it is far

worse that here, EPA changed course and revoked a

previously issued permit without considering costs, including

the costs of reliance on the permit.

As a general rule, when an agency changes an existing

policy or changes its position on an issue, the agency “need

not demonstrate to a court’s satisfaction that the reasons for

the new policy are better than the reasons for the old one.”

FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515

(2009). The agency must show only that there are “good

reasons” for the new policy or position. Id.

But the Supreme Court has carefully articulated an

exception to that general principle: An agency must provide a

“more detailed justification” for a change in position if the

agency’s prior position “engendered serious reliance

interests.” Id.; see also Smiley v. Citibank (South Dakota),

N.A., 517 U.S. 735, 742 (1996). “In such cases it is not that

further justification is demanded by the mere fact of policy

change; but that a reasoned explanation is needed for

disregarding facts and circumstances that underlay or were

engendered by the prior policy.” Fox, 556 U.S. at 515-16.

The Supreme Court’s recent decision in Encino

Motorcars, LLC v. Navarro, __ U.S. __ (June 20, 2016),

illustrates the point. In that case, the Department of Labor

changed its longstanding interpretation of the Fair Labor

Standards Act. The retail car and truck dealership industry

had long relied on the Department’s prior interpretation.

When justifying its change in position, the Department

nonetheless failed to consider the industry’s reliance. Id. at

__, slip op. at 2-6, 10. The Supreme Court found the

Department’s change in course problematic. The Court said

that, in light of the industry reliance on the Department’s prior

12

position, “the Department needed a more reasoned

explanation for its decision to depart” from its prior

interpretation of the Fair Labor Standards Act. Id. at __, slip

op. at 10-11.

The Supreme Court requires a “more reasoned” or “more

detailed” justification in those circumstances because an

agency change that undermines serious reliance interests

disrupts settled expectations, thereby imposing a significant

cost on regulated parties and contravening basic notions of

due process and fundamental fairness. Here, as elsewhere, the

law seeks to protect those kinds of settled expectations. Cf.

Landgraf v. USI Film Products, 511 U.S. 244, 265 (1994)

(“settled expectations should not be lightly disrupted”); Hilton

v. South Carolina Public Railways Commission, 502 U.S.

197, 202 (1991) (“Stare decisis has added force when the

legislature, in the public sphere, and citizens, in the private

realm, have acted in reliance on a previous decision, for in

this instance overruling the decision would dislodge settled

rights and expectations . . . .”).

Put another way, when an agency changes position in a

way that frustrates reliance interests, the agency’s action is

more costly to regulated parties than when the agency

develops a policy or announces a decision on a clean slate, all

else being equal. This is a commonplace phenomenon in law

and life. To take one example, declining to hire someone is

usually less disruptive to the individual than firing someone.

In the administrative context, the presence of that extra cost –

the reliance cost – triggers a heightened burden of agency

justification: The agency must consider the reliance cost and

must justify its action despite that additional cost.

To be sure, as Justice Ginsburg pointed out in her

concurring opinion in Encino Motorcars, the presence of

13

reliance interests does not “pose an insurmountable obstacle”

to an agency’s desired change in course. Encino Motorcars,

__ U.S. at __, slip op. at 2 n.2 (Ginsburg, J., concurring). But

reliance does pose an obstacle. And the agency must take that

obstacle into account. As Justice Ginsburg put it, the agency

must determine that “the benefits of [its desired action]

outweigh those costs.” Id. at __, slip op. at 2.

Reliance interests pose an especially formidable obstacle

to an agency’s desired change in course in the context of

government-issued permitting. A government-issued permit

typically embodies a limited-time bargain between a private

party and the relevant government agency. If the private

party complies with the permit’s conditions, the government

will allow the party to engage in certain conduct – whether

driving a truck, building a new store, or disposing of fill

material, for example – for a specified period of time.

Therefore, the issuance of a permit is typically intended to,

and typically does, engender reliance by the permittee: The

permit induces the driver to buy a truck, the builder to start

construction, the miner to invest in its operation.

When a permit induces reliance, it has long been

recognized that those settled expectations should not be

lightly disturbed by intervening government action. See, e.g.,

Dainese v. Cooke, 91 U.S. 580, 583-84 (1875) (The

government “should make a clear case of departure from the

permit, or danger to public interests, before appellant should

be arrested midway in the construction of the buildings, and

have them summarily torn down, with all the necessary loss

and expense to him of such a course.”). For example, under

the state common law doctrines of “vested rights” and

“equitable estoppel,” state agencies are often precluded from

nullifying investments made in reasonable reliance on a valid

building or development permit. See 2 E. C. Yokley, Zoning

14

Law and Practice § 14-5 (4th ed. 2009); see also, e.g., Avco

Community Developers, Inc. v. South Coast Regional

Commission, 553 P.2d 546, 550 (Cal. 1976) (“It has long been

the rule in this state and in other jurisdictions that if a property

owner has performed substantial work and incurred

substantial liabilities in good faith reliance upon a permit

issued by the government, he acquires a vested right to

complete construction in accordance with the terms of the

permit.”).

Here, the Section 404 permit afforded Mingo Logan 24

years to engage in an activity that was essential to the

economic viability of its coal mining operation. After

obtaining its permit in 2007, Mingo Logan spent millions of

dollars preparing the site for mining operations. Mingo

Logan’s large expenditures easily qualify as “serious

reliance” upon the permit. Fox, 556 U.S. at 515. And those

investments have been rendered all but worthless by EPA’s

2011 decision to revoke the permit.

Under Fox, because EPA’s change affected “serious

reliance interests,” EPA needed to provide a “more detailed

justification” for its revocation of Mingo Logan’s permit. Id.

And because EPA was revoking a Section 404 permit, EPA’s

more detailed justification needed to explain why the benefits

of revoking Mingo Logan’s permit outweighed all of the

relevant costs, including the significant cost of frustrating

Mingo Logan’s investment-backed reliance on a government-

issued permit. As already discussed, however, EPA did not

even acknowledge the costs of revoking Mingo Logan’s

permit, much less provide the more detailed justification for

revoking the permit that is required by Fox.2

2

To be clear, even if an agency were not required to consider

costs in making an initial decision, Fox would require the agency to

15

II

To sum up: An agency must consider both costs and

benefits of a proposed agency action unless Congress has

barred consideration of costs. When an agency changes

course by revoking a permit, one cost is the frustration of

reliance interests. When reliance interests are frustrated in

that way, the agency must not only consider that cost but must

also provide a “more detailed justification” for its action

revoking the permit. FCC v. Fox Television Stations, Inc.,

556 U.S. 502, 515 (2009). That more detailed justification

must consider all of the relevant costs, including the

frustration of reliance interests. In this case, EPA utterly

failed to meet those basic Administrative Procedure Act

requirements.

How does the majority opinion deal with EPA’s failure to

consider costs? The majority opinion does not address the

issue. Rather, the majority opinion concludes that Mingo

Logan forfeited the argument that EPA had to consider and

justify the costs of revoking the permit. I disagree.

To preserve an issue, a party challenging an agency

action arising in an administrative adjudication such as this

ordinarily must raise the issue before the agency and, if

applicable, before the district court. See Shea v. Kerry, 796

F.3d 42, 56 (D.C. Cir. 2015); Advocates for Highway & Auto

Safety v. Federal Motor Carrier Safety Administration, 429

F.3d 1136, 1148 (D.C. Cir. 2005). The majority opinion says

that Mingo Logan failed to raise its argument about the costs

of revocation before EPA and again before the district court.

But in my view, Mingo Logan raised its costs argument in

both proceedings.

consider reliance costs (if any) if and when the agency later

changed course.

16

First, during the EPA proceeding, Mingo Logan

informed EPA that the agency should consider the costs of the

proposed permit revocation, not just the benefits. In its

written comments to EPA, Mingo Logan argued that Section

404(c) of the Clean Water Act requires EPA to consider all

the costs of revoking a permit: “‘Unacceptable,’ like

‘significant,’ is a relative term that must be weighed against

the endangerment of the species, the size of the project, and

any economic benefit from the project.” Mingo Logan,

Comments in Response and in Opposition to the

Recommended Determination of the U.S. Environmental

Protection Agency Region III 6 n.11 (Nov. 29, 2010)

(emphasis added), at Joint Appendix 712.

Indeed, it is self-evident that Mingo Logan raised a costs

argument because EPA itself responded to Mingo Logan’s

costs argument, stating: “[Mingo Logan’s] contention that the

word ‘unacceptable’ ‘must be weighed against the

endangerment of the species, the size of the project, and any

economic benefit from the project’ is without merit.” EPA,

Final Determination of the U.S. Environmental Protection

Agency Pursuant to § 404(c) of the Clean Water Act

Concerning the Spruce No. 1 Mine, Logan County, West

Virginia app. 6 (Jan. 13, 2011) (hereinafter EPA Final

Determination), at Joint Appendix 955.

Moreover, Mingo Logan specifically informed EPA of

the costs it had incurred – namely, the significant investments

that the Company had made in reliance on the permit: “After

receiving its Section 404 permit, Mingo Logan spent millions

of dollars preparing the Spruce No. 1 site and commencing its

operations.” Mingo Logan, Comments in Response and in

Opposition to the Proposed Determination 33 (June 3, 2010),

at Joint Appendix 403. Mingo Logan added: “Now, more

than three years after the issuance of the permit, as Mingo

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Logan is actively mining the site in an attempt to recoup its

decade-long investment, EPA has declared that the impacts

that it had approved are now unacceptable, and seeks to

revoke the permit.” Mingo Logan, Comments in Response

and in Opposition to the Recommended Determination of the

U.S. Environmental Protection Agency Region III 2 (Nov. 29,

2010), at Joint Appendix 708.

Mingo Logan explained, in addition, that EPA must

provide a more detailed justification for revoking a Section

404 permit: Mingo Logan stressed that while “the 404(c)

standard pre-permit is high; the standard post-permit is even

higher.” Mingo Logan, Comments in Response and in

Opposition to the Recommended Determination of the U.S.

Environmental Protection Agency Region III 8 (Nov. 29,

2010), at Joint Appendix 714.

Taken together, Mingo Logan’s allegations were “made

with sufficient specificity reasonably to alert” EPA that it had

to consider and justify the costs of revoking the permit.

Appalachian Power Co. v. EPA, 251 F.3d 1026, 1036 (D.C.

Cir. 2001).

Second, before the District Court, Mingo Logan

continued to press the same claim that it had made before

EPA. Mingo Logan again discussed the “millions of dollars”

the Company had spent preparing the mining site for

operations. Amended Complaint at 19, Mingo Logan Coal

Co. v. EPA, No. 10-541 (D.D.C. Feb. 28, 2011), at Joint

Appendix 68. And Mingo Logan maintained that “long-

settled legal principles” required EPA “to explain a change in

course” in order to account for the “investment-chilling

prospect of post-permit action.” Supplemental Brief in

Support of Mingo Logan’s Motion for Summary Judgment

and in Opposition to EPA’s Motion for Summary Judgment at

18

9, Mingo Logan Coal Co. v. EPA, No. 10-541 (D.D.C. May

28, 2014). Mingo Logan continued to press that point in a

hearing before the District Court: “[I]t is a fundamental

precept of administrative law that an agency can’t just change

its mind without any reason. We’ve cited several cases in our

brief. There’s the [State Farm] case, the [Jicarilla] case, that

if an agency changes its position it has to articulate a reason

for the change. That’s a fundamental precept of

administrative law for any change.” Tr. of Motion Hearing at

9, Mingo Logan Coal Co. v. EPA, No. 10-541 (D.D.C. July

30, 2014). Mingo Logan therefore raised its costs argument

before the District Court.

Put simply, Mingo Logan made both a State Farm

argument and a Fox argument. The State Farm argument was

that EPA had to consider all of the relevant factors, one of

which was costs. The Fox argument was that the agency had

to provide a more detailed justification because it was

changing course and revoking a previously issued permit. As

a matter of common sense and settled law, those arguments

required EPA to consider not just the benefits of revoking the

permit, but also the costs. How else could EPA perform its

duty under State Farm and Fox without considering the

downside costs as well as the upside benefits of revoking the

permit? See Michigan v. EPA, 135 S. Ct. 2699, 2707, slip op.

at 7 (2015) (“Consideration of cost reflects the understanding

that reasonable regulation ordinarily requires paying attention

to the advantages and the disadvantages of agency

decisions.”).

The majority opinion concludes that Mingo Logan

forfeited its costs argument for two distinct reasons.

First, the majority opinion says that Mingo Logan failed

to make a costs argument at all. But the majority opinion

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acknowledges, as it must, that Mingo Logan preserved the

argument that “EPA is subject to a heightened standard to

justify its withdrawal decision.” Maj. Op. at 22. The majority

opinion nonetheless says that “Mingo Logan’s post-permit

heightened-standard claim does not preserve its reliance-costs

claim.” Id. at 23.

That makes little sense to me. Those are one and the

same argument. After all, EPA must provide a more detailed

justification post-permit, as the Supreme Court has carefully

explained many times, precisely because a revocation (that is,

a change in position) frustrates reliance interests. See Fox,

556 U.S. at 515. So when Mingo Logan argued that EPA had

to provide a more detailed justification for its revocation

decision – an argument that the majority concedes Mingo

Logan has preserved – Mingo Logan necessarily made the

lesser-included argument that EPA had to consider costs.

Again, the agency could not perform its duty under State

Farm or Fox without considering costs.

To illustrate the point, assume that when EPA decided

not to veto the permit, EPA believed that the loss of one coal

miner’s future job was a tolerable cost so long as two

salamanders were saved. Once the permit was issued, the

coal miner was hired and investments were made in the

mining operation. So when EPA decided to revoke the

permit, EPA had to explain how its calculus changed given

that its revocation decision would cause the loss of existing

jobs – not just hypothetical future ones – and existing

investments. That’s what providing a “more detailed

justification” entails in this context. Fox, 556 U.S. at 515.

EPA could not rationally provide a more detailed justification

in this case without considering costs. Therefore, Mingo

Logan necessarily made a costs argument when it asked EPA

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to provide a more detailed justification for its revocation

decision.

Second and alternatively, the majority opinion suggests

that even if Mingo Logan did raise an argument about costs,

Mingo Logan “failed to detail” its reliance costs. Maj. Op. at

21. In the end, this seems to be the crux of the majority

opinion’s objection. To begin with, even on its own terms,

that objection fails. Mingo Logan told the agency that it had

spent “millions of dollars” in reliance on the permit. That is

at least $2 million. Moreover, EPA knew that the costs of

revocation to Mingo Logan were significant. After all, in its

decision revoking the permit, EPA itself “recognize[d] that

Mingo Logan has made significant investments in planning

for operations at the Spruce No. 1 Mine.” EPA Final

Determination at app. 6, at Joint Appendix 1236. At that

time, EPA further noted that the “Spruce No. 1 Mine . . . is

one of the largest mountaintop mining projects ever

authorized in West Virginia.” Id. at 15, at Joint Appendix

806. EPA should have weighed the costs of revocation in the

balance. It did not do so.

There is also a far more fundamental problem with the

majority opinion’s argument that Mingo Logan failed to detail

its costs. EPA’s legal theory throughout these proceedings

has been that costs are irrelevant to permit revocation

decisions. Yet now EPA is faulting Mingo Logan for not

adequately detailing its costs to the agency. That’s a bit rich.

It is not as if EPA said it would consider costs and then

Mingo Logan failed to present evidence. Rather, as reflected

in its decision revoking the permit, EPA made clear that costs

were irrelevant and said it would make its decision based

solely on the adverse effect on animals. See id. at app. 6, at

Joint Appendix 955. It flatly violates SEC v. Chenery for

EPA now to rely on Mingo Logan’s supposed failure to detail

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its costs when EPA (over Mingo Logan’s objection) said at

the agency stage and in the District Court that costs were

irrelevant. See SEC v. Chenery Corp., 318 U.S. 80 (1943);

SEC v. Chenery Corp., 332 U.S. 194 (1947). The forfeiture

argument advanced by EPA (and accepted by the majority

opinion) about Mingo Logan’s supposed failure to detail costs

is entirely unfair to Mingo Logan. I would not countenance

this kind of agency bait and switch.

To be clear, the question whether Mingo Logan failed to

adequately detail its costs is distinct from the question

whether, in the first place, Mingo Logan sufficiently raised an

argument that EPA needed to consider costs. Mingo Logan

clearly raised a costs argument as part of its State Farm/Fox

argument. If EPA thought that Mingo Logan failed to

adequately support its costs estimate as an evidentiary matter,

perhaps that could have been a basis for EPA to conclude that

the benefits of revocation outweighed the apparent costs of

revoking the permit. But EPA never said any such thing.

EPA did not engage in cost-benefit balancing at all. EPA said

costs were irrelevant.

In short, Mingo Logan argued to both EPA and the

District Court that EPA had to consider all of the relevant

factors (State Farm) and provide a more detailed justification

because it was changing position and revoking a permit on

which Mingo Logan had relied (Fox). Mingo Logan

preserved the argument that EPA had to consider costs,

including reliance costs.

***

The Corps issued a 24-year permit to Mingo Logan, but

EPA then revoked the permit four years later. In revoking the

permit, EPA considered the benefits to animals, but none of

the costs to humans. Because that cost-blind approach does

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not satisfy EPA’s duty of reasoned decisionmaking, and

because Mingo Logan adequately raised that issue, I would

direct the District Court to vacate EPA’s revocation decision

and to remand to EPA for the agency to consider the benefits

and costs of its proposed revocation, and to supply a “more

detailed justification” for revoking the permit. Fox, 556 U.S.

at 515. I respectfully dissent.